2016: Global debt exploding

We are on a long, gruesome slide toward economic mayhem.

Nobody is doing anything to turn things around…

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Central Banks and the Rise of Extremism

Danielle DiMartino Booth
May 11, 2016  Mauldin Economics                                                                     Excerpts:

How sweet it would be to report that since 2007 the tide of debt has turned. But, instead, an early 2015 McKinsey report documented that global debt had ballooned with none of the world’s major economies taking positive steps towards reducing their debt levels. Such is the disastrous bent of modern day central banking thinking, and its belief that the only way to alleviate the problem of over-indebtedness is with ever increasing debt.

In all, according to McKinsey’s math, global debt increased by $57 trillion in the seven years ending 2014.

The gold medal winners among creditors were the sovereigns: at 9.3-percent growth, government debt swelled to $58 trillion from a starting point of $33 trillion.

Corporations came in second place with their debt levels rising by 5.9 percent to $56 trillion from $38 trillion. The onus was clearly on these two competitors to offset the relatively weaker growth of financial and household debt which was no doubt dragged down by the collapse in U.S. mortgage availability and the recapitalization of (some) lenders.

Refer back to the IMF’s warning about the critical importance of the starting point for indebted countries’ economies. Then flash forward to the reality that the world economy today is that much more indebted. As for its economies, they are on ever weaker footing.

As The Credit Strategist’s Michael Lewitt recently noted, “Debt drains away vital resources from economic growth. Fighting a debt crisis with more debt is doomed to failure, yet that is not only what global central banks did during the crisis but long after markets stabilized (though the crisis never truly ended, just slowed). This was an epic policy failure that continues today.”

Failure or not, odds are that today’s central bankers will double down on their failed philosophy. If you don’t believe me, ask any German life insurer buckling under the strain of running their business. It’s no wonder regulators estimate that insurers will begin to fail after 2018 due to the impossibility of operating in a negative interest environment with over 80 percent of said insurers’ investments in fixed income…..

….. Cheerleading economists were no doubt levitated by news that U.S. household borrowing exploded in March at a breakneck speed that hasn’t been clocked since 2001. The $29.7 billion one-month gain works out to a 10-percent annualized pace.

The usual suspects of the current recovery remained hard at work – student debt and auto loans continued their journey into the stratosphere. But the most record smashing category was credit card debt, which spiked by $11.1 billion, or at a blistering 14-percent pace.

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There is one outside-the-box economic acceleration plan that has the power to turn this stagnant, debt-ridden situation around:

The Leviticus 25 Plan

Economic liberty for all Americans. Citizen-centered free market economy. Massive revenue growth and balanced budgets for federal, state, and local governments.      Debt elimination and financial security at the family level.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                              The Leviticus 25 Plan 2017 (1496)

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